OSWER961010A
COST RECOVERY POLICY FOR THE LEAKING UNDERGROUND
STORAGE TANK TRUST FUND
A. Overview
This is EPA's first complete statement of its policies on
cost recovery under the Leaking Underground Storr.re Tank (LUST)
Trust Fund. It has required a year of coordinated effort by
various EPA offices to develop and to secure necessary approvals
within the Agency and from other agencies and officials in the
executive and legislative branches of government. Working with
and through States to implement this policy, EPA expects that it
will help cost recovery to become a practical and effective tool
that States will use to both stimulate and fund more cleanups of
releases from underground storage tanks.
Objectives of Cost Recovery
The primary purpose of cost recovery under the LUST Trust
Fund is to provide incentives for owners and operators to comply
with technical and financial responsibility requirements, and
most importantly to clean up releases from.their own tanks. EPA
expects that State-lead cleanups followed by cost recovery will
continue to occur in a minority of cases, becaus the majority of
cleanups are conducted by owners and operators. 'hen cost
recovery is necessary, it will generate income r r additional
cleanups.
Cost recovery as practiced under the LUST Trust Fund will
depart significantly from the approaches taken in other Federal
environmental response programs. Consistent with the State-
centered design of the underground storage tank program, states
will implement the cost recovery program, have considerable
discretion in operating it, and benefit directly from their
successful recoveries.
The two most innovative aspects of EPA's cost recovery
policy for the LUST Trust Fund should provide States with the
autonomy and the incentive necessary to pursue recoveries
aggressively and efficiently. First, States with cooperative
agreements will litigate and settle recovery claims without the
routine involvement or concurrence of EPA or the Department of
Justice. Second, States may retain any Trust Fund monies they
recover for use on additional Fund-eligible cleanups and
activities.
Legal Rationale
The legal rationale behind this approach was developed by
the Agency in consultation with the Department of Justice.
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OSWER Directive 9610.10A
Under 28 U.S.C. Section 516, the Department of Justice (DOJ)
must conduct any litigation in which the United States has an
interest unless there is an exception authorized by law. EPA
interprets section 9003(h) of Subtitle I to be such an exception,
allowing States under cooperative agreements that have the
capabilities to carry out effective corrective actions and
enforcement activities to exercise various program authorities,
including the cost recovery authority provided in section
9003(h)(6). These States may also settle cost recovery litigation
as part of the exercise of enforcement discretion conveyed by
section 9003(h).
Additionally, EPA interprets section 9003(h) to provide
authority for States to administratively settle cost recovery
claims. EPA believes that this authority includes the ability to
compromise or terminate Trust Fund claims based on considerations
of equity as described in section 90.03(h)(6)(B) (e.g., reducing
the claim to the amount of required financial responsibility).
Finally, EPA has determined that, consistent with the
"program income" concept described in OMB Circular A-102, that ,
States may retain recovered Trust Fund monies to perform
additional eligible activities under their cooperative
agreements. Thus, appropriate requirements in 40 C.F.R. Parts 30
and 31 on the documentation and use of program income apply to
recoveries of Trust Fund money.
Recovery Procedures
Variations in State recovery procedures can be expected, but
generally States will be responsible for all of the following
activities in cases that they deem to be high priorities:
o Determination of a release
o Notification of responsibility to the owner or operator
o Negotiation for corrective action (in non-emergency
situations)
o Cleanup (if the owner or operator is incapable or
unwilling to clean up)
o Demand for payment
o Negotiation for a settlement of the recovery claim
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OSWER Directive 9610.10A
o Litigation (when demand for payment and efforts to
reach an administrative settlement fail)
o Collection and case closure
States are encouraged to tailor the specifics of these
procedures to suit their individual programs and to save program
resources. In addition, the detailed policy guidance that
follows has been developed to help ensure that cost recovery
resources are used efficiently and stimulate compliance by owners
and operators.
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OSWER Directive 9610.10A
B. State and Federal Roles in Cost Recovery
Policy
Under their cooperative agreements, States are responsible
for all legal, programmatic, and administrative activities
necessary to recover their expenditures from the LUST Trust Fund.
This includes undertaking administrative and judicial recovery
actions and settling claims. They are responsible for required
reporting and recordkeeping including documenting that their
Trust Fund recoveries are used for additional eligible activities
under their cooperative agreements. EPA will provide general
policy guidelines to States and make funding available for
recovery programs through the States' cooperative agreements.
EPA will also assess the performance of State cost recovery
programs and provide support and assistance to States where they
are needed to improve performance. The Agency will generally be
bound by settlements and judgments reached in States, but
reserves the right to pursue recoveries independently in the
extreme case. Also, EPA may pursue recoveries in those rare
cases where the Agency has performed a federal-lead response.
Guidance
States are expected to have adequate legal authorities to
undertake cost recovery either by having or acquiring their own
authorities, or certifying that they are able to use federal
authorities. States with their own recovery authorities should
also cite Subtitle I in their recovery actions (i.e., demand
letters, administrative orders, and judicial complaints) to
establish the liability of owners/operators to the federal
government for Trust Fund expenditures.
EPA is currently formulating policies on a number of issues
related to recovery litigation. One major unresolved issue is
whether States should bring judicial recovery actions in State or
federal courts. Until these issues are resolved, states should,
within one week, notify EPA's Office of Regional Counsel when
filing judicial recovery actions for sites where they have used
Trust Fund money for cleanup or enforcement. This will give EPA
the opportunity to consult with the State, determine whether the
action might affect the scope of the Agency's Subtitle I
authorities, and if necessary, provide technical or legal
assistance to the State. However, EPA will not require States to
delay recovery litigation while the Agency reviews complaints
submitted by States.
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OSWER Directive 9610.10A
States must maintain accounting and recordkeeping systems
that will document all Trust Fund expenditures, support cost
recovery with site-specific records, and demonstrate that
recovered funds are retained and used for additional eligible
activities under their cooperative agreements. State
recordkeeping and accounting must conform to requirements in
these guidelines and the Leaking Underground Storage Tank Trust
Fund State Financial Management Handbook (March 1989) .
States will have considerable discretion in prioritizing
cases for cost recovery and determining an appropriate level of
effort to devote to each case. At a minimum, in each case States
should make reasonable efforts to contact owners and operators
who are liable for releases, notify them of their liability for
enforcement and corrective action costs, and demand payment. In
those rare cases where equitable factors support compromise or
termination of the Trust Fund claim, States should ensure that
the bases for any compromise or termination are adequately
supported in the records of the State and reflect the efficient
use of Trust Fund resources. States may compromise Trust Fund
claims when/ for example, an owner/operator demonstrates that
he/she lacks the financial resources to pay the claim; the State
determines that the likelihood of success on litigating the claim
as small because of the absence of proof of liability or
unavailability of required witnesses; or costs of judicial
collection is disproportionately high. States should note that
their ability to reduce claims based on the equities described in
section 9003h(6)(B) is limited to cases where owners/operators
have maintained required levels of financial assurance.
Because they are more cost effective, negotiated settlements
are generally preferred over litigation. In many cases, however,
EPA expects that it will be necessary for States to initiate and
pursue judicial action to compel recalcitrant owners and
operators to pay cleanup costs. In deciding whether to litigate
individual cases States should consider the solvency of the
owner/operator, the costs of cleanup, the likelihood of recovery,
the case's deterrence value and the opportunity costs (the
resources necessary to proceed that could otherwise be used in
pursuing other cases or in other parts of the State's Trust Fund
program).
As used here, the term "compromise" means accepting less
than the full value of the claim. The term "termination"
means forgoing any cost recovery whatsoever.
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OSWER Directive 9610.10A
Even where no administrative or judicial settlement is
reached, States must formally close out all cases and document
the reasons for deciding not to proceed further. Factors
justifying case closure include the situations where costs of
pursuing a case further will approach or exceed the potential
recovery, bankruptcy of the owner/operator, and other reasons.
States should not allow the statute of limitation (SOL) to run
and justify closure solely on that basis. States should
generally pursue cases promptly and file actions in a timely
manner to enhance the chances for recovery. States should revise
their priorities for individual recovery cases as SOL deadlines
approach. Until the issue is resolved by the courts, States
relying solely on Subtitle I cost recovery authorities should be
prudent and proceed assuming a three year limit applies, despite
the fact that EPA believes that a six year limit is applicable.
This is necessary because some courts have applied the three year
limit to similar cases.
When States make successful recoveries at sites where Trust
Fund monies were used, they may retain the Trust Fund share as
program income consistent with OMB Circular A-102 and 40 CFR
Parts 30.525 and 31.25. This means that States may use recovered
federal Trust Fund monies for additional Fund-eligible cleanups
and activities under their agreements. When States choose to do
so, they must inform EPA, and keep appropriate records of how the
recoveries were used. In negotiating their cooperative
agreements, States and Regions should develop contingency plans
that will allow States to obligate their recoveries efficiently.
States should calculate the federal Trust Fund share of their
recoveries on a site-by-site, pro rata basis. For example, if a
State spends 50 thousand dollars of LUST Trust Fund money at a
site, and the State ultimately recovers 50 percent of all Federal
and State money used at the site, it must redirect 25 thousand
dollars of "program income" into Fund-eligible activities.
EPA expects States with cooperative agreements to adequately
fund and staff recovery efforts to deal with anticipated case
loads. Cost recovery activities are allowable costs under
Subtitle I. Where the recovery program is dependent on the
Attorney General's Office, the State should consider the need for
formal funding arrangements (e.g., a memorandum of agreement) to
ensure legal staffing for cost recovery referrals. When the
Trust Fund is not used to pay for such legal staffing, States may
wish to investigate the possibility of counting these legal
services as "in-kind contributions" toward satisfying their match
requirements under 40 C.F.R. Part 31.24.
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OSWER Directive 9610.10A
EPA's principal responsibilities in cost recovery are to
provide funding, policy, guidance, oversight, and assistance to
States. The Agency's operational role in cost recovery will
generally be limited to pursuing recoveries in those cases where
EPA responds directly to a release, and in rare cases of
overfiling.
EPA intends to make its expectations for the activities and
performance of cost recovery programs reasonable and clear to
States in advance. This will occur through policy, guidance,
routine communications, program appraisal and reviews, and the
negotiation of cooperative agreements. The oversight and
assistance functions of EPA's program, grants, and financial
management offices will accommodate variations in State
procedures and capabilities to the maximum extent possible. The
Agency's goals will be to help build State capabilities,
particularly in developing recovery programs and to improve
performance. At present, EPA has no numerical expectations for
the performance of State recovery programs. Early in the
recovery program it will focus on States' progress toward putting
basic systems, policies, and procedures in place that will enable
them to recover Trust Fund expenditures efficiently and
effectively.
EPA is working with several States on pilot projects to
develop realistic expectations for program performance, and to
identify effective recovery procedures. The results will help
EPA support State programs with tools and guidance. They will
also help the Agency formulate and communicate more precise
expectations for program performance.
Generally, EPA will be bound by States' judicial actions and
settlements. However if EPA finds that a State is not
effectively implementing cost recoveries, the Agency will offer
the State necessary assistance in correcting any problems. The
Office of Underground Storage Tanks will be most interested in
seeing that States have adequate accounting and recordkeeping
systems in place and that States identify, develop, and pursue
appropriate recovery cases in a timely and sound manner. If
problems in these or other areas persist, the Agency may take
appropriate action under regulations governing cooperative
agreements. In extreme cases, EPA may consider filing a recovery
action against the owner/operator even though the State has the
authority to initiate an action or has already done so.
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OSWER Directive 9610.10A
C. Recoverable Costs
Policy
Owners and operators are liable for all costs of corrective
action and enforcement, including interest, indirect and
"management and support" costs associated with these activities
that are paid for by the Trust Fund. States are not required to
pursue Trust Fund expenditures for program management costs
incurred by the U.S. E.P.A.
States will assess and may collect interest on Trust Fund
expenditures used for corrective action and enforcement.
Interest charges should provide incentives for responsible
parties to settle cost recovery claims. Procedures for assessing
interest charges are described separately in this document.
Owners and operators are also liable for Trust Fund
expenditures made by States in overseeing responsible party
cleanups. Generally, the costs of oversight are comparatively
low and the number of cases is very large. Therefore, EPA
expects that States will exercise discretion in determining an
appropriate level of effort to devote to pursuing oversight
costs.
Guidance
In each case, States will exercise their discretion in
determining exactly which costs they will pursue. EPA is more
interested in a State's overall record in cost recovery than in
retrospectively examining decisions to pursue particular costs in
hundreds or thousands of cases. Direct costs are most easily
documented and defended in litigation. However, the Leaking
Underaround Storage Tank Trust Fund State Financial Management
Handbook (March 1989) contains a procedure that States can use to
allocate all non-site Trust Fund costs including "management and
support" costs to individual sites. Using this methodology,
States will have available to them the full cost of a particular
site cleanup at the time of the cost recovery action. To the
extent that they are legally able, States should allocate all
Trust Fund expenditures to sites for the purpose of cost
recovery. States may also develop their own systems for
allocating non-site costs and/or include additional State
overhead costs that are beyond the scope of their cooperative
agreements.
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OSWER Directive 9610.10A
EPA expects that the costs of overseeing cleanups by
cooperative owners and operators will usually be a lower priority
for recovery because Fund expenditures for oversight of a typical
cleanup will be comparatively small. In addition, States may
wish to exercise their discretion and not pursue these costs in
cases where this will provide valuable incentives for owners and
operators to clean up releases from their tanks.
In some cases States will expend significant enforcement
resources to compel reluctant owners or operators to cleanup or
to pay cleanup costs (e.g., legal costs associated with cost
recovery, protracted negotiations, issuance of cleanup orders and
litigation). These costs are recoverable. Presenting these costs
to liable owners and operators with the direct costs of cleanup
will give States additional leverage in their attempts to reach
agreements for responsible party cleanups and recovery of costs.
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OSWER Directive 9610.IDA
D. Interest Charges
Policy
Owners and operators are liable for interest charges on
Trust Fund expenditures at their sites. States should assess
interest on expenditures from the Fund in the cost recovery
process. States are allowed to retain recovered interest for
additional eligible activities.
Guidance
Section 9003(h) of the Resource Conservation and Recovery
Act (RCRA) describes the States' role in recovering LUST Trust
Fund expenditures - but does not specifically address the
collection of interest on those expenditures. However, EPA is
entitled under the Debt Collection Act and common law authorities
to collect interest on Trust Fund expenditures. Since States
will have responsibility for recovering Trust Fund expenditures
under section 9003(h), the States will also assess and are
encouraged to pursue interest charges. Because States are
permitted to retain recoverable Fund expenditures for additional
cleanups and recoveries, they can also retain recovered interest
for use on additional eligible activities. The States'
collection of interest will deter responsible parties from
resisting payment in order to gain an interest-free loan on the
uncollected expenditures.
Before assessing interest, the State should notify the
debtor through a written notice (demand letter explaining the
agency's requirements concerning the debt and the interest).
Interest shall accrue from the date on which notice of the debt
and interest requirements is mailed or hand-delivered to the
responsible party.
The minimum recommended rate of interest that States should
assess is found in the Yearly Percentage Bulletin printed every
December with the rate for the following fiscal year. The rate
is equal to the average investment rate for the Treasury tax and
loan accounts. It represents the current value of funds to the
United States Treasury, and is published by the Treasury's
Financial Management Service. EPA will notify States of the new
rates each year.
EPA is examining the possibility of calculating a minimum
interest rate that more closely approximates the yield on Trust
Fund investments. The Agency will notify States if and when they
are to use this type of minimum rate.
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OSWER Directive 9610.10A
A State may assess a higher rate of interest if it
reasonably determines that this is necessary to protect the
expenditures from the Trust Fund. The rate of interest as
initially assessed will remain fixed for the duration of the
indebtedness, except where a debtor has defaulted on a repayment
agreement and seeks to enter into a new agreement. New
agreements should reflect the current value of funds to the
Treasury at the time the new agreement is executed.
Interest should not be recovered if the amount due (Trust
Fund expenditures) is paid within 30 days after the date from
which the written notice was delivered to the responsible party.
However, the State may decide, on a case-by-case basis, to extend
the 30-day period for payment.
As part of their responsibility for settling claims, States
may decide not to pursue the collection of interest on a debt
entirely or in part once it has been assessed when they determine
it is in the best interest of the program. States may decide not
to pursue interest if the collection of interest puts the
responsible party in financial distress, or the cost of
collecting the interest will be more than the amount collected.
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OSWER Directive 9610.10A
E. Priorities For Cost Recovery
Policy
Under their cooperative agreements states should have or
should develop systems to set priorities for cost recovery cases.
They should devote greatest efforts to cases where owners or
operators are solvent but recalcitrant, and to cases where they
fail to comply with applicable financial responsibility
requirements. Some effort should be devoted to all cases
involving Trust Fund cleanups or enforcement actions. This
means, at a minimum, a search for responsible parties (RPs) and a
demand for payment if an RP is located.
Guidance
Where the State expends Trust Fund money for corrective
action or enforcement, and "action thresholds" (see section "F")
have triggered site-specific accounting, the State will pursue
recovery of costs from responsible parties. Timely processing of
cases (and litigation where necessary) increases the chances of
successful recovery. However, the level of recovery effort that
should be devoted to any case should be based on a weighing of
the resources necessary to recover the claim against the amount
that may be recovered and the prospects for recovery. The
determination should be based on factors such as: the solvency of
the RP, the cost of cleanup, the likelihood of recovery, the
deterrent value of the case, and the opportunity costs (resources
that could be used in pursuing other cases or in other parts of
the State's Trust Fund program).
States will develop their own priority systems based on
these and other relevant considerations, but there are general
circumstances where cost recovery should be assigned a high
priority, low priority, or is impracticable because owners or
operators cannot be located.
High priority - Solvent RPs who refuse to comply with
corrective action orders or are otherwise recalcitrant
should be pursued aggressively, to serve as a warning
to the regulated community and to stimulate compliance
by other RPs.
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OSWER Directive 9610.IDA
High priority - Owners and operators who do not comply
with financial responsibility requirements should be
pursued vigorously. Although Section 9003 of RCRA
generally allows consideration of whether pursuit of
full cost recovery will significantly impair an RP's
ability to continue in business, States are precluded
by statute from considering this factor if the RP has
not complied with financial responsibility requirements
in effect at the time.
Low priority - States should generally commit fewer
resources to insolvent or financially distressed RPs,
although selective pursuit within the class should be
undertaken where the RP could afford lesser amounts, is
hiding assets, fails to cooperate, or was negligent in
allowing the release to occur. Whenever States perform
corrective actions using the Trust Fund, the RP should,
at a minimum, be sent a demand for payment. The level
of additional State effort beyond this point should be
based on an evaluation of the factors listed above.
Where cooperative owners and operators perform
cleanups, States may wish to make recovery of oversight
costs a low priority, to encourage voluntary cleanups.
Impracticable - Sites where a liable owner or operator
cannot be identified will require expenditures from the
Trust Fund for cleanup. Efforts to recover costs
expended at these sites will rarely result in recovery
of funds. However, States should make reasonable
efforts to locate a liable owner or operator before
assigning a low priority to cost recovery in these
cases.
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OSWER Directive 9610.10A
F. Documentation Of Costs
Policy
States are required to document all Trust Fund expenditures
and all corrective action and enforcement costs on a site-
specific basis at each site where they have met any one of the
following "action thresholds": l) performed an emergency
response; 2) begun a detailed site investigation; or 3)
determined that an owner or operator is or is likely to be
recalcitrant.
Guidance
States must establish a financial cost accounting system
that tracks the costs of cleanup and. enforcement activities on a
site-specific basis when any one of the specified "action
thresholds" is met. States are normally not required to begin
site-specific accounting until States or their contractors begin
a Trust Fund-financed, detailed.site investigation or an
emergency response has begun. A detailed site investigation is
an attempt to determine the source, extent and severity of a
release. An initial site visit (e.g., to determine if a release
has occurred) should generally not trigger site-specific
accounting because not all sites will be candidates for
significant Trust Fund expenditures and cost recovery. If an RP
is clearly recalcitrant, however, site-specific accounting should
begin as soon as costs are incurred. Generally, contractor
activity at a site will trigger site-specific accounting.
Site-specific information needed on corrective action
activities and costs for sites where Trust Fund monies are used
includes:
Site location and description
- Results of site investigations (including
identification of responsible parties)
Enforcement actions taken
- Documentation of responses taken and time frames
Documentation of all costs, identifying Trust Fund
monies expended including contractor invoices
Enforcement costs include all expenditures reasonably
related to inducing a recalcitrant RP to comply and to recovering
clean-up expenditures. They include the salaries and other
expenses associated with case development, negotiations, and
litigation.
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OSWER Directive 9610.10A
States should establish cost-effective accounting systems to
support recovery of Trust Fund monies in courts. Features of
cost documentation that are essential to recovering costs in
court include:
Systems that are adequate for both cost recovery
purposes (i.e., will support the state's claim in
administrative or judicial action to recover) and audit
purposes. At a minimum, the system should provide proof
that the work or purchase was authorized by the State;
the work or purchase was completed; the state was
billed; and the bill was paid.
In many cases, States may have to respond to arguments
that the costs claimed are unreasonable and unnecessary.
The Financial Management Division of EPA's Office of the
Comptroller has developed more detailed guidance for State
accounting and recordkeeping. The Leaking Underground Storage
Tank Trust Fund State Financial Management Handbook was published
in March 1989 to help States meet these accounting requirements.
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OSWER Directive 9610.IDA
Special Conditions
REQUIREMENTS FOR INCLUSION
IN LUST STATE COOPERATIVE AGREEMENTS
1. State agrees to maintain a financial cost accounting system
which meets the requirements of 40 CFR 30.510 or 40 CFR
31.20. For this and other requirements on grantees, Part
31 applies to all cooperative agreements with budget or
project periods beginning on or after October 1, 1988.
Part 31 also applies to all amendments of existing
agreements in which all of the activities in the
amendment's scope of work will be performed after October
1, 1988. Parts 30 and 33 (for procurement) apply to other
cooperative agreements and' amendments.
2. State agrees to organize and maintain site-specific
information consistent with accounting thresholds and
policies described in the Cost Recovery Policy for the
Leaking Underground Storage Tank Trust Fund (OSWER
Directive 9610.10A, May 1994), where Trust Fund monies are
used. Prior to making expenditures of Trust Fund monies
for corrective and enforcement actions, a system roust be in
place to record these types of costs on a site-specific
basis. When site-specific accounting is required, all
costs that can be identified to a particular site should be
charged accordingly and State contractors must bill costs
on a site-specific basis for corrective action and
enforcement work performed at those sites.
3. The State acknowledges that expenditures from the LUST
Trust Fund constitute a liability of the owner/operator to
the United States. The State agrees to retain recoveries
of any LUST Trust Fund expenditures as program income, as
described in OMB Directive A-102 and 40 C.F.R. Parts
30.525(a) or 3l.25(g)(2), to be used for additional
eligible Trust Fund activities.
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OSWER Directive 9610.10A
(CONTINUATION OF SPECIAL CONDITION 3 —
INSERT 1 OR 2 BELOW)
(INSERT 1. for States which have State authority consistent with
those in RCRA Section 9003(h) to recover response expenditures
The State therefore agrees that:
(a) It will make reasonable efforts to recover these costs,
including interest, from liable owners/operators.
States must send a copy of their complaint to EPA's
Office of Regional Counsel within one week of filing
judicial recovery actions for Trust Fund expenditures.
(b) It will report on any amounts received from the
owner/operator as recovered costs, or agreed or
adjudged to be owed by-the owner/operator as
settlements for site clean-up, in accordance with
applicable guidance on Trust Fund Financial and
Quarterly reporting; and
(c) To the extent the State is successful in recovering
these costs, it will dedicate and use these funds for
additional Trust-Fund-eligible activities, and maintain
appropriate accounting of recovered funds in order to
document the reuse of recovered funds in accordance
with the requirements of 40 CFR 30.525 or 31.25, as
appropriate, and in accordance with applicable
requirements of this Cooperative Agreement.
(d) If the State has not yet done so, the State will submit
certification of its authorities to EPA within 120 days
after the award of this Cooperative Agreement. The
certification will be signed by: (1) the State's
Attorney General, (2) someone designated by the
Attorney General to sign such documents, or (3) the
State's or Governor's General Counsel or other such
official who is responsible for advising all executive
branch agencies on the scope of their authority.
(e) It will notify EPA promptly of any reduction in its
authority to recover response expenditures (e.g.,
successful challenge to its State statutory authority).
(INSERT 2. for States lacking State authorities consistent with
those in Section 9003fh) of RCRA to recover response expenditures
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OSWER Directive 9610.10A
The State therefore agrees that to the extent the State lacks the
authority or procedure to recover response expenditures on behalf
of the LUST Trust Fund (i.e.. the authority to recover such costs
from owners/operators and retain such monies for additional LUST
Trust Fund corrective action and enforcement), the State will
delay taking cost recovery action until the state:
(a) Obtains legislative authority for cost recovery which is
consistent with Section 9003(h)(6) of RCRA and provides to
EPA certification of such authority from: (1) the State's
Attorney General, (2) someone designated by the Attorney
General to sign such certifications, or (3) the State's or
Governor's General Counsel, or other such official who is
responsible for advising all executive branch agencies on
the scope of their authority. This certification should be
provided by the end of the next legislative session. (The
State understands that if it has not made a good faith
effort to obtain this authority, EPA may decline to enter
into subsequent cooperative agreements.)
OR
Provides EPA with certification from the State officials
described above that State law permits it to exercise the
authorities in Sections 9003(h)(6) of RCRA. (The State
understands that if it has not provided this certification
to EPA within 120 days after the award of this Cooperative
Agreement EPA may withhold payment of LUST Trust Fund money
consistent with 40 C.F.R. 30.902 or 31.43).
Once the State has obtained the legislative authority or made a
certification under paragraph (a) above, the State agrees that:
(i) It will make reasonable efforts to recover these costs,
including interest, from liable owners/operators.
States must send a copy of their complaint to EPA's
Office of Regional Counsel within one week of filing
judicial recovery actions for Trust Fund expenditures.
(ii) It will report any amounts received from the
owner/operator as recovered costs, or agreed or
adjudged to be owed by the owner/operator as
settlements for site clean-up in accordance with
applicable guidance on Trust Fund Financial and
Quarterly Reporting; and
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OSWER Directive 9610.10A
(iii) To the extent the State is successful in recovering
these costs, it will dedicate these funds for
additional Trust-Fund-eligible activities, and maintain
appropriate accounting of recovered funds in order to
document the reuse of recovered funds in accordance
with the requirements of 40 CFR 30.525 or 31.25, as
appropriate, and in accordance with applicable
requirements of this cooperative agreement.
(iv) It will notify EPA promptly of any reduction in its
authority to recover response expenditures (e.g.,
successful challenge to its State statutory authority).
[END OF INSERT 2]
4. State agrees to maintain supporting documentation and
appropriate records in support of any future cost
recovery efforts. The State shall adhere to the
principles of documentation and records retention
specified in the Cost Recovery Policy for the Leaking
Underground Storage Tank Trust Fund (OSWER Directive
9610.10A, May 1994). On topics not addressed by these
guidelines, the State agrees to adhere to the
principles of documentation and record retention
specified in the Leaking Underground Storage Tank Trust
Fund State Financial Management Handbook (March 1989).
The State agrees to make these records available to the
federal government, as needed, on a case-by-case basis.
5. State agrees to provide reports as outlined in the LUST
Trust Fund Cooperative Agreement Guidelines (OSWER
Directive 9650.10A, May 1994). These reports consist
of Quarterly Progress Reports, Financial Status Reports
(SF 269), Federal Cash Transactions Report (SF 272),
and Exception Reports.
6. State agrees to identify Letter of Credit drawdowns
under EPA's three major activity codes. The three
codes are: "7" — General Support and Management, "E"—
Site Cleanup Actions, and "4" — Enforcement.
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